Editor’s note: This market commentary is provided by the Dairy Division at FCStone/Downes-O'Neill in Chicago, Ill.
Bulls were back in the saddle yesterday with Class III futures settling anywhere from -.01 to +.35 despite blocks trading ¼ cent lower and barrels holding steady.
The swing, the bounce, came back in this bull step. Both November12 ($20.19) and December12 ($20.20) settled at contract highs and Dec traded a new intra-day high, as did Jan13-July13.
The bulls seem to be in solid control. Premium padding in deferreds months ― remember the “slope of hope” from 2009/2010 ― is strong amidst concerns over milk supply both out West and in the Midwest.
Some seasonal buying interest in conjunction with yet another move to the upside in grains helped buoy Tuesday’s Class III gains. Corn is once again in bull mode… so is milk. Looking forward, some supply concerns may also be at play. Although supply is adequate currently, talk of firming abounds.
Grain markets continued to wear their “rally monkeys” front and center yesterday, with soy prices leading the charge aggressively to the upside. Chinese demand is being talked about as unquenchable for the grains. And with rain hard to come by, and negative Pro Farmer reports continuing to roll in for both corn and beans, the path of least resistance is to the up side as we test (corn) and make new contract highs (beans).
We look for corn to open 2 to 4 lower, for beans to open 5 to 7 lower.
Daily CME spot market prices:
Block cheese: $1.8375 (down 0.25 cent)
Barrel cheese $1.805 (unchanged)
Butter: $1.80 (unchanged)
Grade A NFDM: $1.66 (up 1 cent)
These data and comments are provided for information purposes only and are not intended to be used for specific trading strategies. Commodity trading is risky and FCStone Group, Inc., INTL FCStone Inc., and their affiliates assume no liability for the use of any information contained herein. Although all information is believed to be reliable, we cannot guarantee its accuracy and completeness. Past financial results are not necessarily indicative of future performance. Any examples given are strictly hypothetical and no representation is being made that any person will or is likely to achieve profits or losses similar to those examples. References to and discussions of exchange traded products are made solely on behalf of FCStone, LLC. References to and discussions of OTC products are made solely on behalf of INTL Hanley, LLC, and OTC products are only available to eligible counterparties.